How to build your kids' credit during COVID-19 pandemic

Posted at 6:07 PM, Jul 09, 2020

LAS VEGAS — Right now, many recent high school graduates are facing a tough question — is it worth it to take on tens of thousands of dollars in debt to attend college during a pandemic?

The irony of building credit is that it requires taking on debt — and no one wants to take on debt, especially during the pandemic. But according to one credit expert, there are some simple financial moves that parents can make right now to set up their kids for future financial success.

Building credit isn't priority number one for kids, but it could open or close a lot of doors down the road.

"Good credit can make things easier for you in the future, whether it's securing loans, credit cards with better terms and rates. It might even help your ability to land a job or a desirable apartment," said Nathan Grant, a senior credit industry analyst at

Grant says that even though kids can't open their own bank account until their 18, parents can start teaching kids about credit long before that, perhaps with a prepaid card.

"Many of those allow for monthly direct deposits. So, you could have their allowance loaded directly on their card, and that could, at an early age, give them a way to understand budgeting and using a card that has a limit on it to teach them better spending habits," Grant said.

Then, as children approach adulthood, Grant says that parents should consider making them an authorized user on a family credit card. Even if parents are not ready to let kids make purchases and payments on the card, Grant says just making them an authorized user will help them build credit.

"Many credit card issuers offer this, and most issuers report the account's activity in the authorized user's name, whether or not they are actually using the account. So, you can add them as a user and not give them access. It will hopefully build their credit up right out of the gate," Grant said.

When kids are ready for their own cards, parents shouldn't just pick the shiniest piece of plastic. Grant says a secured credit card could be a safer option for someone with little or no credit.

"It uses a refundable security deposit that you fund yourself to fund the account's credit limit, upon approval," Grant said. "So, there's less risk on the issuer's part. So, for somebody who is new to credit or doesn't have any credit history, that could get your foot in the door.

Grant said he couldn't offer advice either way on whether grads should pay for college with credit. But he said that anyone that decides to take a "gap year" should try to pay off any existing debts and save for the future.

For those that do decide to go attend college, Grant has some general advice.

"The best rule of thumb, on top of just general responsible use, is just try not to use your credit card for purchases you know you won't be able to pay off before that monthly due date," he said. "Not spending beyond your means, that's going to be more valuable in your college years than ever."

For more ways to boost your credit score, click here.

This story was originally published by Ross DiMattei on KTNV in Las Vegas.